The Financial Stability Board today put forth several policy proposals aimed at increasing the resilience of money market funds, which experienced extreme volatility in the early days of the COVID-19 pandemic.
As part of its ongoing work on non-bank financial intermediation and following significant volatility in short-term funding markets early in the pandemic, the Financial Stability Board is seeking comments on various policy proposals aimed at enhancing the resilience of money market funds.
In a comment letter today, ABA told the Securities and Exchange Commission that any reform of money market funds should not focus on regulated banks, which have been a source of strength during the pandemic.
Following significant liquidity strains—particularly among money market mutual funds—at the outset of the COVID-19 pandemic last March, the Financial Stability Board will publish a report in July outlining “consequential policy proposals” to improve MMF resilience.
In remarks at a virtual industry event today, Fed Governor Lael Brainard commented on the strong performance of the banking sector during the COVID-19 pandemic, emphasizing that strong capital and liquidity positions will continue to be important as banks continue to face a high degree of uncertainty.
The nation’s banks “remain resilient” amid ongoing pressures brought on by the pandemic, the Federal Reserve said today in its semiannual monetary policy report. The Fed noted that bank profitability and capital positions improved in the second half of 2020, citing lower-than-expected losses and an improved economic outlook, among other things.
The Securities and Exchange Commission is seeking feedback on potential ways to improve the resilience of money market funds in the face of economic instability.
In its most sweeping move yet to prop up the U.S. economy amid the coronavirus pandemic and public health response, the Federal Reserve this morning unveiled several new facilities to support the flow of up to $300 billion in financing to households and businesses and committed to quantitative easing “in amounts needed” to support market functioning.
As part of its policy response to the market turmoil triggered by the coronavirus pandemic, the Federal Reserve overnight announced a new Money Market Mutual Fund Liquidity Facility, or MMLF.
The OCC today issued guidance on money market mutual funds, or MMFs, for banks that offer MMFs to customers or that automatically sweep funds between deposit accounts and MMFs, as well as banks that invest in MMFs.